Questions

[orangezeke]

so i am about to ask some novice questions.

today i made my way over to the sales office of the new 'supalai' premier @ asoke. they have a range of options from studio to one and two bed apartments. http://[email protected]

they have their pre-sales days today and tomorrow. honestly, the place is packed and the studio apartments are all already sold. people are walking in and buying then and there. 6 studio units each floor x 28 floors x 3.3mil approx per unit = 554mil baht just in studio rooms before a brick has even been laid. that doesn't account for any other room types.

the sales person i spoke with said most buyers are investment buyers and will sell again off the plan before construction is even finished.

so, the first guy buys and sells off the plan. lets say 3.3 buy in today, sell at 4.0 in two years time. the second guy buys and sells an actual apartment. 4.0 buy in, sell a brand new apartment at 4.4. so here is my question:

who is the third buyer ? what do they want it for ? to live in it ? to rent it ? to sell again for profit ? are there even people living in these condos ? i am mystified as to who the third person is in the equation because really, aren't they the people driving the market ? are there really that many people looking to rent in bkk ? are there people who would buy to live in these apartments ?

please let me know if my guess at profit margins were correct.

im interested because i am thinking about buying myself. if everyone else is doing it, there has to be a dollar there right !?

[london]

who is the third buyer ?

who knows ?

what do they want it for ? to live in it ? to rent it ? to sell again for profit ?

again, who knows ? From my experience, there are many people who buy to hold with the intention of either renting or living in the place themselves.....but there are others who do try to flick them for a quick profit.

are there even people living in these condos ?

there will be when and IF they are built.

i am mystified as to who the third person is in the equation because really, aren't they the people driving the market ?

No. They are the end buyers of just a minority of the original buyers who buy to flick them for a quick profit. The market is being driven by the buyers who are buying off the plan.

are there really that many people looking to rent in bkk ?

Doubtful.

are there people who would buy to live in these apartments ?

of course

please let me know if my guess at profit margins were correct.

They may be and they may be either too optimistic or too conservative. Frankly, I doubt if they would get the profit you are suggesting..

im interested because i am thinking about buying myself. if everyone else is doing it, there has to be a dollar there right !?

You are obviously a brave person. FIRST rule in Thailand: DON'T BUY OFF THE PLAN ! Second rule: DON'T believe Condo sales people.

[FritsSikkink]

who is the third buyer ?

who knows ?

what do they want it for ? to live in it ? to rent it ? to sell again for profit ?

again, who knows ? From my experience, there are many people who buy to hold with the intention of either renting or living in the place themselves.....but there are others who do try to flick them for a quick profit.

are there even people living in these condos ?

there will be when and IF they are built.

i am mystified as to who the third person is in the equation because really, aren't they the people driving the market ?

No. They are the end buyers of just a minority of the original buyers who buy to flick them for a quick profit. The market is being driven by the buyers who are buying off the plan.

are there really that many people looking to rent in bkk ?

Doubtful.

are there people who would buy to live in these apartments ?

of course

please let me know if my guess at profit margins were correct.

They may be and they may be either too optimistic or too conservative. Frankly, I doubt if they would get the profit you are suggesting..

im interested because i am thinking about buying myself. if everyone else is doing it, there has to be a dollar there right !?

You are obviously a brave person. FIRST rule in Thailand: DON'T BUY OFF THE PLAN ! Second rule: DON'T believe Condo sales people.

I second that

[Darrel]

who is the third buyer ?

If he exists at all he is an idiot.

Trouble is, by the time buildings currently being sold off-plan actually get to the point of the third buyer, I dont think there will be many around.

That's when the fun will start.

Why oh why doesnt this country introduce proper taxation to prevent this absurd speculation which does no-one any good in the long run? This is the stuff that south sea island bubbles are made of.

[pomchop]

You might also want to know if all these buyers are getting some special 100% financing deal from either the developer or a Thai bank. You can be sure if they have little or no of their money invested they will line up to buy in the hopes of flipping and making a profit. BUT you can also be sure that if the market isn't there and they can't sell it or rent it for enough to cover the mortgage then they will first not pay the maintenance fees meaning very quickly there will be NO or little maintenance...then the owners will walk away from the units and it may well be tied up in some complicated legal issues for many many years. Thai real estate laws re foreclosure are not the same as in the west.

There are still some buildings in bkk that have many empty units that are just concrete shells left over from the big boom in the late 90's and though you would think they would have figured it out to foreclose and resell it is apparently not always so simple.

My gut feeling is right now BKK has overbuilt condos and there are not going to be enough renters willing or able to pay the knds of rent that the developers indicate. Take a look at some of the new buidings along the BTS and see how many lights are on at night. I know one very nice 3 year old building that has about half of the units that were bought by investors sitting empty waiting for somebody to come in and pay 30 to 40,000 baht a month in rent. But it isn't happening.

While you "might" get lucky if you are a first buyer always remember in real estate the true flippers are looking to sell to the "last or bigger fool"...don't let that be you. If you are looking for a place to live long term you might be much better off to buy in an older established condo where all teh problems have been sorted out and all the units are either owner occupants or constantly rented.

Anyway..just my two cents worth. As they say Buyer Beware, especially when you are dealing in a country where you don't really understand all the rules.

[Tatsujin]

After 7 years living here, I'm still amazed at the sheer quantity of apartments/condos that are available and STILL being built. With the recent tax breaks for Thai's on buying condos I can understand people buying now rather than renting, but I still can't believe that there are that many 'renters' out there for all these properties. They are all way over-priced to my mind. Having said that, someone, somewhere is making lots and lots of money from them.

[CWMcMurray]

I also find it hard to believe that many of these condos will find renters... in most cases, if some one can afford the 30-40k to rent one of these units, they can easily qualify to buy the same condo and pay the mortgage...

In the rental market, I believe the low end market would be a better investment, as most of the renters could not qualify for a mortgage and are stuck renting...

[Darrel]

............in most cases, if some one can afford the 30-40k to rent one of these units, they can easily qualify to buy the same condo and pay the mortgage...

This is very true. But there are untold numbers of people with a lot of money living here more or less permanently who wouldn't buy Thai property at any price, under any circumstances, because they distrust it and the people selling it.

And there are lots of people renting here who have no intention whatsoever of being here for more than a year or two or three.

Between them, they probably keep the rental market going.

[92302]

............in most cases, if some one can afford the 30-40k to rent one of these units, they can easily qualify to buy the same condo and pay the mortgage...

This is very true. But there are untold numbers of people with a lot of money living here more or less permanently who wouldn't buy Thai property at any price, under any circumstances, because they distrust it and the people selling it.

And there are lots of people renting here who have no intention whatsoever of being here for more than a year or two or three.

Between them, they probably keep the rental market going.

It's always the folk that have "lots of money" that don't own anything here not even the motorbike they ride, nothing, zilch, nada, strange that.

[letitbe]

forget it its a scam Some seem to make it work and find a mug buying from them. In end they all go down in value. We used to have 4 condos in BKK all in older blocks. Theirs a huge surplus and last one we could not get a tenant even when rent got reduced form usual 35,000 we used to get to 20,000. We bought it 10 years ago for 3.9 million and sold it last year for 2.6 but other 3 we sold with a really good profit.

Unless you have experience in property for many years don't do it. But let others tell you how much they have made. Weve made a lot on property over last 15 years but only on older stuff and ive been in property in USA UK Europe for 50 years and here for 15.

Buy in Florida at moment or Tokio. florida has gone down around 60% + and some blocks in Tokio are 80% down because no one want a high rise after earthquake. Phuket was a total steal after Sumani.

[letitbe]

forget it its a scam Some seem to make it work and find a mug buying from them. In end they all go down in value. We used to have 4 condos in BKK all in older blocks. Theirs a huge surplus and last one we could not get a tenant even when rent got reduced form usual 35,000 we used to get to 20,000. We bought it 10 years ago for 3.9 million and sold it last year for 2.6 but other 3 we sold with a really good profit.

Unless you have experience in property for many years don't do it. But let others tell you how much they have made. Weve made a lot on property over last 15 years but only on older stuff and ive been in property in USA UK Europe for 50 years and here for 15.

Buy in Florida at moment or Tokio. florida has gone down around 60% + and some blocks in Tokio are 80% down because no one want a high rise after earthquake. Phuket was a total steal after Sumani.

correction last one bought for 3.9 million 10 years ago sold last year for 3.6 million other 3 bought over last 8-12 years for average 3 million sold for average 4 million over last 2-3 years with rentals of around 10% yield in meantime

[Tatsujin]

One thing to consider/remember is the difference in attitudes between those from the "West" and those from the "East".

When talking about properties, in the west generally, properties tend to last a long time and go up in value consistently as they are built well and the being "old" adds value rather than detracts from it. Here in Asia however, the opposite is often true, people don't want "old", they always want the newest 'thing' they can have.

I know a few 'well-off' Thai's who have purchased condos here in BKK and never ever used them or rented them, they were bought so that their children can use them when they are studying in BKK. These were bought when the kids were about 2-3 years old, so they will have sat empty for at least 15 years . . . crazy.

[Darrel]

It's always the folk that have "lots of money" that don't own anything here not even the motorbike they ride, nothing, zilch, nada, strange that.

Actually two of the guys I know personally who are in that group of non property-buyers both own the cars they drive here (one rather plush BMW sedan, one huge 4-wheel drive monster with built-in everything). They also drink imported beer that costs more than I spend most days on food, and they live in luxurious beach-front condos which they rent all year round, even when they aren't here.

They both own property in other countries, but mention buying property here to them and they just laugh.

They are probably the other extreme from the non-owners that you mentioned, but even so they do exist. There are a lot of in-betweeners also.

Personally, my position is also somewhere between the two, both in terms of my finances and in terms of buying. I think that the right place at the right price is worth buying here, but it's got to be the right place at the right price, and not the usual run of the mill hopelessly over-priced rubbish one sees everywhere. And I would never buy anything, anywhere, that I wouldn't be prepared to live in myself if I had to.

[orangezeke]

further to this, supalai just announced in yesterdays BP that they have two new condos approved for construction - one on ekkamai thonglor and the other on ngamwongwan. pre sales to start next month. that means they have 4 condominium buildings i know of being sold even before a single footing has been poured.

i have to get into this market before i am left behind !